Talent shortages are a hot topic in Asian banking and the discussion mainly revolves around specific jobs in specific sectors. Relationship managers in private banking provide the prime example – even the Hong Kong government is concerned that there are too few of these folks to meet future demand.
But the rapid growth of banking in Asia has created a more widespread and potentially more worrying shortage of senior leadership skills, says Singapore-based Professor Massimo Massa, the Rothschild Chaired Professor of Banking at INSEAD, the business school with campuses in France, Singapore and Abu Dhabi.
We spoke to Professor Massa, who is also an academic advisor to INSEAD's Masters in Finance programme, about how the careers of mid-level finance professionals are stalling because they don’t have the right skills to reach the upper ranks.
Financial professionals in Asia are well trained specialists with excellent technical skills. But unfortunately [efc_twitter text="banks in Asia have imported a silo mentality from the West"]. Their employees know their niche very well, whether that’s FX or asset management, but not the entire picture of the company. It’s difficult for leaders to emerge when there are too few people who have a broad understanding of the business. We have these large banking conglomerates covering many areas, but customers typically only interact directly with different silos of the bank, so it’s also hard for customers to get proper solutions. Banks in Asia have copied this defective siloed approach from the US and Europe, although at least here the model came in later – we haven’t been stuck in it for as long, so we have more flexibility to get out of it.
Financial markets are smaller and more country-focused here than in the West, so it’s harder to create financial leaders who think cross-border. A banker in Singapore may be able to help your company expand locally but the same person will probably struggle if you want to expand in China. To become leaders later on in their careers, it’s important that finance professionals in Singapore can think both locally and regionally, and can follow their clients out of the country.
It’s all well and good banks assigning staff to work in other countries, but that’s not enough if the people who move don’t change their mentality as a result. For example, in European private banking, clients tend to be risk-adverse, but in Asia they tend to be entrepreneurial and take more risks with their assets. If you adopt the same mentality in Asia as in Europe, you’re likely to fail.
In Asia, the traditional educational focus has been on courses that will help you become a smart mathematician, quant, computer scientist or accountant. But when these people become mid-ranking employees at banks in the region their careers often get stuck. If you want to go up, you need the skills to step up. In the ideal career of a finance professional, you start by learning technical skills, then as you progress you learn about strategy, and the final stage is the critical human element – how you lead and manage people and relationships.
So finance skills are just tools – they don’t make you a strategic leader, they don’t mean you can build relationships with clients or understand your own firm’s organisational structure. A Masters in Finance focuses on understanding the trends that financial leaders today are required to navigate their institutions through – a constantly changing environment with varying degrees of economic growth and complex regulations. And it builds the people-management skills that you need to succeed at a senior level.
Banks’ efforts to retain staff via training are often ineffective because the whole notion of retention is of declining importance. The speed in which the banking sector has moved, especially in Asian markets, in recent years means the skills needed in the industry are changing too – banks often don’t actually want to keep the same staff with the same skills for as long as they did in the past.
On the other side, finance professionals want mobility to progress their careers, but in-house training at banks offers a narrow, provincial world view and that’s where external training can help. How can you become an effective leader if you’re being trained by a business which has its own leadership problems like some banks do? Aspiring leaders must be able to openly discuss where their own firm is going wrong in an open environment with people from other organisations.
MBAs are often too generalist – they are better for learning about general business proficiency and making yourself more marketable and productive. An EMBA is a better comparison with a Masters in Finance because both are done part time at about 10 years into your career. But an EMBA operates across different industries, making it less relevant to banking. There are aspects of leadership in banking which are much more advanced than in any other industry. For example, if you’re in a managerial job at a car company, you don’t need to understand the engineering complexities of your products – you can delegate these to your engineers. But leaders in banking still need to understand their products and develop strong relationships with those who make them – we saw in the financial crisis what happened when they didn’t.